Many Austrians predicted months ago (which is a very long time given the current political / economical climate) that gold would have a major slump after this past rally. They also said that shortly after the slump gold would go nuts. As in $1500-2000 nuts. Is todays plunge the last of it, or could we see $800 gold or is it time to hold on and watch it go? I tend to believe that certain groups in power (fed imf etc) will try to hold it down until after the 2010 election, so as not to let the dollar look to bad while the parasites make their desperate grabs for office. However, their power is fading and the real world economics are happening like so much physics or gravity- reality will have to peek in eventually. What do you think?
I’m not sure how much gold the IMF has, but I would speculate that it’s too little to create significant change. The Fed isn’t allowed to sell gold, only the US Treasury is. My guess is as good as yours. I think we might be in for some credit contraction, which would bring the price of gold down, but then again there might be several factors that I’m overlooking.
It has around 100 million ounces. It is actually the biggest gold holder in the world. If they decide to drop off the deep end with gold then you may see a large decrease in gold. I think they sold 400 tonnes earlier this year around April-May so you can see a drop in the price of around 100 dollars per ounce
That’s not “nuts”. You should be looking at gold as the ultimate protective call option for the day of inevitable validation of the Austrian theory. It may be bumpy and it may take years, but can you afford to wake up the morning of the reckoning day not owning any gold – when it opens up DOUBLE from the day before if there are any offers on the screens at all? Just keep min 10% of your net worth in gold – sell when it goes up, buy when it goes down during normal market fluctuations to keep your position close to 10%, and sleep tight.
Z.